You Own a Portfolio Equally Invested in a Risk-Free Asset

question 28

Multiple Choice

You own a portfolio equally invested in a risk-free asset and two stocks.If one of the stocks has a beta of 1.04 and the total portfolio is equally as risky as the market,what must the beta be for the other stock in your portfolio?

• A)1.37
• B)1.54
• C)2.97
• D)1.96
• E)2.30

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Definitions:

Certificates of Deposit

Interest-bearing bank deposits with a fixed maturity date, penalty for early withdrawal, and are insured.

Proceeds

Refers to the money or other benefits received from a transaction or event.

180 Days

A time period equivalent to roughly six months, often referenced in the context of deadlines or durations for specific actions or conditions.

Debtor

An individual or entity that owes money to another individual or entity, known as the creditor.